IRS Updates Ruling Policy On Corporate Business Purpose And Device Requirements Under Section 355

The U.S. Internal Revenue Service ("IRS") released Revenue Procedure 2016-45 (the "Revenue Procedure") on August 26, 2016, permitting taxpayers once again to seek private letter rulings on issues of "corporate business purpose" and "device" under Section 355 of the U.S. Internal Revenue Code of 1986, as amended (dealing with tax-free spin-offs and related transactions). The corporate business purpose and device requirements under Section 355 have long been matters on which the IRS has preemptively declined to issue letter rulings or determination letters (these are commonly referred to as "no-rule" areas, the full list of which is reissued annually; see, e.g., Rev. Proc. 2016-3). The Revenue Procedure states that the IRS has determined that there are a number of unresolved legal issues relating to the corporate business purpose and device requirements that may be germane to determining the tax consequences of a transaction. As a result, the IRS will consider ruling